Duncan Lewis has been on many important missions, but the new head of the Department of Defence may be facing his toughest to date. By Tom Skotnicki The local defence industry has a champion in the new head of the Department of Defence - Duncan Lewis. A few years ago in the wake of the Collins Class submarine fiasco, a senior Defence official said in an off-the-record conversation that were it not for the armed forces and the politicians, virtually all defence platforms would be bought directly from overseas. However, in the intervening years there have been some improvements in the management of complex defence acquisitions. Recently, there has been some slowdown in the speed of approvals and expenditure in the light of the government's tight budgetary position, but Lewis has no intention of advocating a reduction in the role of domestic suppliers. The former Special Forces commander doesn't underestimate the management task he faces. In a world where Asia is emerging as the focus for global growth, defence challenges are radically changing. Lewis, who before becoming defence secretary was national security adviser to the prime minister, is uniquely positioned to assist with the inevitable transition. He is also the first professional soldier to occupy the position. Lewis's last position in the military was as commander of Special Operations with the rank of major general. He previously commanded the Special Air Services, where he played a part in reinforcing its role as the sharp end of Australia's military response in engagements such as East Timor, Iraq and Afghanistan. Lewis is very much an Australian version of a special forces warrior. He is easy-going, has a typically Australian sense of irony and a casual air. There is none of the latent threat one often observes with former special forces soldiers and officers. But given his background there is no doubting the inner steel and discipline. This is just as well because Lewis faces a huge task in tackling the bureaucracy and ingrained culture that surrounds the Department of Defence. Sure, its sheer size and complexity makes change difficult, but in the past there has always been the suspicion that part of the problem has been an insular culture unwilling to change. Lewis sympathises with the issues the department faces, but is also aware of the problems highlighted by an official review last August by Rufus Black, of the Melbourne Business School, into Defence accountability. The review found serious accountability problems and confusion over responsibility for "deliverables". Lewis has a responsibility to defend the department, but is also prepared to acknowledge the difficulties. He admits to having been involved on the periphery of the report's development, while still national security adviser. "It brings home to us a few things - firstly how densely thatched our committee processes are within the department … the committee processes within Defence are famous, perhaps infamous, but we do need to de-thatch that process and put decision-making squarely into the hands of the responsible officers that should be making those decisions." He adds the role of committees is to advise and assist and provide support, but decisions should be made by an appointed officer. Lewis says this the was nub of the "alignment" problem identified by Black. Dealing with Complexity Lewis says there also needs to be more horizontal integration, which is the concept of "one Defence". In many ways Defence is a "confederation" of the three services as well as groups within the department such as intelligence, security, finance, the Defence Materiel Organisation and ICT. As a result, there is a need for enormous horizontal integration, which Lewis says is a challenge. He points, for example, at capability development, which starts "as a germ of an idea in one of the services" and this goes to specialised "capability" staff who need to work out whether the answer is to buy, for example, a ship or an aircraft. He says it then goes to the Defence Materiel Organisation to examine buying the equipment and then back to the services to ensure it can supply the necessary personnel (for the ship or aircraft). There is also a facilities issue, for example, whether a hanger will be required for the aircraft, which involves the Defence Support Group. This in turn has to be supported by the strategic logistics structure. Lewis acknowledges that as a consequence the organisation can appear to be moribund. "We get a lot of criticism for the slowness in the delivery of projects and the fact that projects go off the rails. I am not an apologist, we have had some very, very bad failures … it is a matter of public record. But what is not so evident to the public is I think 97 per cent of the Defence Materiel Organisation's projects - these are acquisitions and they have about 250 projects running at any one time - are delivered on time and budget. "Some of them [failures] are spectacular, I agree, but from a management point of view if you are building a road, we have been building roads for many, many years and we know how much a metre it costs to build a road, it is almost nailed down. But if you are building a submarine, you only build them once every 30 years … so it is quite tricky." The local industry Lewis says it can be more efficient to buy off-the-shelf equipment. However, he says Australia does have a local defence industry. "I am not insensitive to the needs of local industry," he says, while also acknowledging the department runs defence policy, not industry policy. "But I am sufficiently nuanced to understand the requirements of Defence need to be very heavily supported by domestic industry and it would be ridiculous of us to have a situation where Australian industry could no longer support our Defence Force. So we need to invest very heavily in Australian industry and make sure it can sustain our Defence Force into the future." He adds: "It is definitely not a make-work scheme". New Strategic Challenges The challenges the department faces have already forced changes in its strategic posture, according to Lewis. "The train has already left the station," he says. Issues such as the cyber threat have been apparent for a few years, but are growing, as is the need for improved weapons technology and accuracy. Lewis points out the Chief of the Defence Force is the main adviser on military issues to government and has the lead on these issues. However, it is obviously a dual responsibility with the secretary controlling the purse strings. Lewis says other changes include asymmetric warfare, such as terrorism, as was so clearly demonstrated by the destruction of the World Trade Centre. He says the asymmetric nature of that attack "has left an indelible impression on our strategic calculus". "This is also the Asia Pacific century," Lewis says. "There is a strategic weight that is moving into the Asia Pacific area … and it is moving from the northern hemisphere." Lewis says it is being driven by economic growth, burgeoning personal wealth, growth in the middle classes and new consumer patterns. There are significant upsides, but "there are tensions that can develop and so there are potentially downsides". Lewis says part of his job is to examine those downsides. The US is also very aware of the situation and as a result Australia now has agreements that enable US troops to rotate through the north of the country. He says over the next four or five years there would be an increase in the number of US Marines deployed out of Darwin. They will be rotated every six months and increase to about 2500 Marines in any one rotation by 2017. There will also be increased US Air Force rotations. However, he emphasises this will not involve the creation of US bases and it is an extension of the existing co-operation with the US and its military forces. One of the key areas of potential vulnerability, according to Lewis, is the north west. He says as a West Australian he is well aware of its significance and as a young officer spent considerable time there. "It is a burgeoning generator of wealth for the country and we need to ensure we have adequate security arrangements in place." He says he did not believe there was a need to establish military bases in the area because the existing approach, the military equivalent of a fly-in-fly-out workforce, is sufficient. It involves ships transiting through the gas and oil fields, occasional military exercises and military aircraft overflying the area. These are also recommendations of a report by two of his predecessors, Ric Smith and Allan Hawke. Lewis says he is surprised how many Australians are unaware of the extent of the development taking place in the north west and the enormous financial stake (with offshore gas platforms investment alone worth $140 billion). As a military man, the Defence Secretary has a deep understanding of these critical issues. He now also has the skills of a sophisticated public servant. It is a formidable combination but it will need to be if he is to overcome his department's endemic problems. How Lewis stacks up Duncan Lewis understands government, has impeccable Defence credentials and understands the bureaucracy. But most importantly he has real strategic vision. This is view of Professor Ross Babbage, a former head of Defence and Strategic Studies at the Australian National University and one-time head of strategic analysis at the Office of National Assessments. Babbage said the biggest challenge for Lewis would be the unbelievably conservative culture of Defence. "It is slow to change. It will be a struggle to try and reform it." Some analysts argue that in Defence there is always a struggle between the chief of the defence force and the defence secretary with both in a position to exercise power and influence with government. "The view has tended to be that the defence force is in an ascendency because of its numbers but this ignores the reality that it is the bureaucracy and the secretary that controls the purse strings," he said. Even more significant is the fact that the division between bureaucracy and defence forces that existed 20 years ago has to a large extent been broken down. "You have personnel at almost all levels working closely with civilian staff," he said. Babbage said one of the greatest difficulties faced by defence was its acquisition program administered by the Defence Materiel Organisation (DMO). The departure of longtime CEO Steve Gumley last year has already led to some restructuring. One of the less recent changes that Babbage strongly supports has been the creation of a list of troubled defence projects. The Projects Of Concern List was established in 2008. Currently there are six projects listed, down from 12 a year ago. He said it signals to the DMO and the companies concerned that these projects are in trouble, and leads to mechanisms designed to deal with the issues. Babbage (pictured) said it highlights the difficulty of trying to develop and adapt highly sophisticated military equipment for Australian specifications and ensuring that a significant portion of the work takes place in Australia. "Time and again we have seen off-the-shelf acquisitions from overseas delivered on time and within budget and yet we continue to insist on trying to undertake major projects in Australia. It is largely about politics and the Australian population has to decide whether it wants value for money or a make-work scheme," Babbage said.

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Biography Duncan Lewis was only 10 when he first seriously began thinking about a career in the armed forces. It was the mid-1960s and Australia had just entered the Vietnam War alongside the US. His grandfather, who had served in both world wars, was a big influence. At 17, the Perth boy went to Canberra to attend Duntroon for his officer training. Lewis doesn't talk much about family (he is married with two children), possibly a hangover from his time in the SAS where secrecy is essential. However, in the best Australian tradition, he admits to a love of football and Richmond. He says he thought he was fairly good as he grew up playing schoolboy football in Perth and later at Duntroon. As for academic performance: "I tried hard for an average result." He admits sport was a major distraction and some suggested he never really tried hard enough. "I had a great time [growing up], probably a better time than I should have had." Having finished high school he never had any thought about any other career. "I always wanted to join the military." Australia still had troops in Vietnam when Lewis went to Duntroon. He acknowledges the military was going through tough times with demonstrations against returning troops. "There was a lot of public controversy …they were very hard years for the military." Lewis says Duntroon was a challenge. Part of the requirement was a university degree and to learn his "profession of arms" as well as the physical challenges. "It was a rigorous and vigorous way to spend your life but I enjoyed every minute of it. It was always what I had wanted to do … living the dream." Graduating as a lieutenant, he went to the infantry and as soon as he was able joined Australia's elite special forces, the SAS. He subsequently had three tours of duty within the SAS. Asked about the SAS selection process, Lewis said it was the "hardest thing I have ever done in a physical and probably a mental sense. It still is a very difficult thing. On the course I did, there were 15 that started and two got through, a fairly high attrition rate." Lewis before leaving the army as a two-star major general and special forces commander had relatively limited exposure to the public service other than a stint as military attaché in Jakarta where he worked closely with the Department of Foreign Affairs as well as Defence. However, he had distinguished himself on several occasions, including the 1992 Lebanon War and in East Timor where he commanded forces in the western sector. He was also in overall command of the special forces troops that seized the Norwegian freighter, the MV Tampa, in August 2001. He doesn't mind discussing the more than 30 years he spent in the military, but says it is now almost eight years since he left and took a position as assistant secretary advising on security matters with the Department of Prime Minister and Cabinet. He points out he has had more experience in the senior echelons of government than time he spent as a very senior officer during his military career. Lewis says the time spent working closely with three prime ministers was invaluable experience. It was while working for Kevin Rudd that Lewis was appointed national security adviser. One of the attractions of the public sector, according to Lewis, is the variety of issues and roles with which public servants become involved. "If you had asked me whether I would have interested myself in meat exports or people smuggling or a range of other challenges the government has faced over the past seven or eight years then I would have been quite surprised."